MBNA Shares Fall on Shortfall News

The stock of MBNA Corp. fell Thursday even though the credit-card company posted a 2.9 percent increase in fourth-quarter net income. However, the results were lower than Wall Street's expectations.

Shares of MBNA closed at $17.25, down $1.05, or 5.7 percent, on the New York Stock Exchange.

MBNA, Wilmington, Del., said it earned $540.2 million, or 41 cents a share, in the quarter, compared with $524.8 million, or 40 cents a share, a year ago.

The latest results fell short of the average analyst estimate of 46 cents a share, compiled by Thomson First Call.

The company blamed the fourth-quarter earnings shortfall on its move to set aside more money for uncollectible loans amid the ongoing economic slowdown.

MBNA said the increase in the loan loss provision was directly tied to a change in an accounting methodology within its consumer finance portfolio _ and not its credit-card portfolio. Essentially, the company boosted its provision to cover 12 months, instead of 9 months, of expected losses.

MBNA declined to say whether, in light of regulators' recent crackdown on card-issuers, it decided to boost the provision on its own or at the behest of regulators.

The $12 billion consumer finance portfolio, which comprises about 10 percent of total loans, is largely unsecured lines of credit directly marketed to customers.

A smaller portion of the portfolio provides private label lines of credit to furniture and computer retailers.

MBNA increased its provision, or money set aside to cover bad loans, to $1.42 billion, up from $1.23 billion in the third quarter and $1.19 billion in last year's fourth quarter.

Regulators have cracked down on credit-card issuers over the past year, imposing stiffer rules on certain companies _ notably those that target customers with poor credit _ to crimp a rapid rise in consumer debt and defaults amid the prolonged economic slowdown.